Banks Npa & Impact on Indian Economy
Banks NPA and Impact on Indian Economy
Introduction:- A well organized and efficient banking system is a pre-requisite for economic growth. Banks play an important role in the functioning of organized money market. in order to meet the banking needs of various sections of the society, a large network of bank branches has been established. There are four type of banking institutions. a- Commercial Banks b- Regional Rural Banks c- Co-operative Banks d- Development Banks (Term lending institutions) Principal Enactment of Banking Functions: There is an elaborate framework governing the functioning of banks in India. The principal enactment of which governs the functioning of various banks are as under:- a- Banking Regulation Act 1949 b- Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 c- Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 d- State Bank of India Act, 1955 e- Regional Rural Bank Act, 1976 f- Companies Act, 1956 g- Co- operative Societies Act, 1912 or the relevant state Co-operative societies Act Besides the above enactment the provisions of Reserve Bank of India Act, 1934 also effect the functioning of banks. The Act gives wide powers to Reserve Bank of India to give directions to banks, such directions also have considerable effect on the functioning of banks. Classification of Assets:- The assets may be classified in two types a- Performing asset b- Non- Performing Asset (NPA) W.e.f. 31st march 2004 NPA is a loan or an advance where,
1- Interest and/ or Installment of principal remain over due for a period of more than 90 days in respect of term loan.
2- The account remain out of order for a period of more than 90 days in respect of an over draft/ cash credit.
3- The bill remains over due for a period of more than 90 days in the case of bills purchased and discounted.
4- Interest and/ or Installment of principal
Introduction:- A well organized and efficient banking system is a pre-requisite for economic growth. Banks play an important role in the functioning of organized money market. in order to meet the banking needs of various sections of the society, a large network of bank branches has been established. There are four type of banking institutions. a- Commercial Banks b- Regional Rural Banks c- Co-operative Banks d- Development Banks (Term lending institutions) Principal Enactment of Banking Functions: There is an elaborate framework governing the functioning of banks in India. The principal enactment of which governs the functioning of various banks are as under:- a- Banking Regulation Act 1949 b- Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 c- Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 d- State Bank of India Act, 1955 e- Regional Rural Bank Act, 1976 f- Companies Act, 1956 g- Co- operative Societies Act, 1912 or the relevant state Co-operative societies Act Besides the above enactment the provisions of Reserve Bank of India Act, 1934 also effect the functioning of banks. The Act gives wide powers to Reserve Bank of India to give directions to banks, such directions also have considerable effect on the functioning of banks. Classification of Assets:- The assets may be classified in two types a- Performing asset b- Non- Performing Asset (NPA) W.e.f. 31st march 2004 NPA is a loan or an advance where,
1- Interest and/ or Installment of principal remain over due for a period of more than 90 days in respect of term loan.
2- The account remain out of order for a period of more than 90 days in respect of an over draft/ cash credit.
3- The bill remains over due for a period of more than 90 days in the case of bills purchased and discounted.
4- Interest and/ or Installment of principal